DECISION NO:46/97 CATCHWORDS INDUSTRIAL RELATIONS - UNLAWFUL TERMINATION - Application for review - whether Court can order security for costs - Principles to be applied in determining whether security should be ordered Workplace Relations Act 1996 S 170EA Federal Court of Australia Act 1976 (Cth) Bankruptcy Act 1966 Canceri v Taylor (1994) 1 IRCR 120 JH Billington Ltd v Billinton (1907) 2 KB 106 Lines v Tana Pty Ltd [1987] VR 641 Shackley v The Australian Croatian Club Ltd (unreported, Industrial Relations Court of Australia, Full Court 17 December 1996) Barton v Minister for Foreign Affairs (1984) 2 FCR 463 Cowell v Taylor (1886) 31 Ch D 34 Flecther & Ors v Commissioner of Taxation (1992) 37 FCR 288 Lall v 53 - 55 Hall Street Pyt Ltd (1978) 1 NSWLR 310 Paton v Campbell Captial Ltd (unreported, Federal Court of Australia, Burchett J, 1 July 1993) No. AI 1213 of 1995 PETER MICHAEL JOHNSTON v MILSTERN SALES PTY LTD MOORE J CANBERRA 28 FEBRUARY 1997 IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. AI 1213 of 1995 ) ACT DISTRICT REGISTRY ) BETWEEN: PETER MICHAEL JOHNSTON First Applicant AND: MILSTERN SALES PTY LTD Respondent JUDGE: Moore J PLACE: Canberra DATE: 28 February 1997 ORDER OF THE COURT THE COURT ORDERS THAT: 1. The applicant provide security for costs in a form and manner satisfactory to the Registrar of the Court in the sum of $2000 within 28 days of the date of this judgment. 2. In the event that security is not provided in accordance with order 1, the application for review be stayed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules. IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. AI 1213 of 1995 ) ACT DISTRICT REGISTRY ) BETWEEN: PETER MICHAEL JOHNSTON First Applicant AND: MILSTERN SALES PTY LTD Respondent JUDGE: Moore J PLACE: Canberra DATE: 28 February 1997 REASONS FOR JUDGMENT This judgment deals with an application by Milstern Sales Pty Ltd ("Milstern") for an order requiring that security for costs be provided by Mr Peter Johnston who has sought the review of an order of a Judicial Registrar dismissing an application on his behalf under s 170EA of what is now called the Workplace Relations Act 1996 (Cth) ("the Act"). An order is also sought by Milstern staying the review proceedings. Johnston worked for Milstern as a maintenance manager at a large hotel it operated in Canberra. On 7 July 1995, his employment with Milstern was terminated. On 10 July 1995, the application was brought under s 170EA. The application was dealt with by the Judicial Registrar on 15 May 1996 when she dismissed it. In her written reasons the Judicial Registrar recounted the evidence led by the applicant and dealt with the matter by reference to that evidence only. This course was followed because the Judicial Registrar had concluded, at the end of the applicant's evidence, that the application could not succeed and that the costs of a second day of hearing should be avoided. It does not appear from the Judicial Registrar's reasons that a no case submission had been made by Milstern or that Milstern had elected not to call evidence. Thus it is not clear whether the facts recorded in the reasons represent findings made. However, it is reasonably clear that the Judicial Registrar's account of the events leading to Johnston's termination was based on the acceptance of witnesses called on Johnston's behalf and involved making certain assumptions favourable to Johnston. At this point it is appropriate, having regard to the approach of the Judicial Registrar, for me to do likewise. The essential features of Johnston's case recounted by the Judicial Registrar may be summarised as follows. Johnston started work on 15 February 1993. He was aware, and was concerned about, the asbestos used in the construction of the hotel. He raised it with the General Manager of the hotel, Mr Hoare, in December 1994. Thereafter nothing was done by Hoare or Johnston about the matter until July 1995. Work that might expose asbestos was then being done by subcontractors on the hotel's air conditioning. Johnston again spoke to Hoare who appeared, to a degree, uninterested. Johnston got his girlfriend, who also worked a the hotel, to ring Mr Purse, from the ACT Occupational Health and Safety Council ("the Council"). Purse spoke to Johnston. Purse gave what appears to have been a direction that no one was to enter the areas containing asbestos other than in accordance with occupational health and safety laws. Purse told Johnston that he could be personally liable if anything did occur contrary to the direction. Johnston represented to Purse he had authority to carry out the direction. At no point in her reasons does the Judicial Registrar express the view that Johnston did not have that authority, though it may be inferred from her reasons as a whole that this was her view. Johnston did not seek approval from anyone in the hotel management to do what he did in contacting, indirectly, Purse and indicating to him he had authority to stop entry into areas of the hotel. After the conversation with Purse, Johnston locked certain areas of the hotel. On 6 July 1995 Johnston instructed the air conditioning subcontractors to cease work. He then told Hoare of the direction from the Council. Johnston then took the view that Hoare could not go into the areas containing asbestos to inspect them. Later that day, Hoare informed Johnston that the Council had been contacted and there would be an inspection. The following day, Johnston and another employee, Mr Fairburn, entered the foyer of the hotel and saw Hoare with another man. The other man was an architect, Mr Dunstan, retained by Milstern to advise it. Johnston expected that there would be an inspection that day and approached Hoare and asked the other man whether he was from the Council. Hoare said he was not. Johnston believed Hoare and his companion had gone into the boiler rooms in the basement. Johnston objected to this. Sometime shortly after, Johnston received a phone call from Hoare by mobile phone. Johnston was then in the foyer of the hotel. Hoare asked Johnston to go to the fifth floor to give Hoare access to another boiler room. Johnston indicated he would not allow access and in the course of the conversation described Hoare as a "fucking idiot". Johnston and Fairburn went to the fifth floor and saw Hoare and Dunstan endeavouring to gain access to the boiler room. Words were exchanged between Hoare and Johnston during which Johnston used language disparaging of Hoare. Johnston indicated he would use force to restrain Hoare from entering the boiler room. At this point Hoare decided to dismiss Johnston and telephoned him shortly after this incident and informed him that this was his intention. They met outside the hotel where Johnston abused Hoare. It has been necessary to set out at some length events leading to Johnston's dismissal as, in my opinion, they have a bearing on whether an order for security for costs should be made. The Act does not expressly confer upon the Industrial Relation Court of Australia a power to order security for costs. This is to be contrasted with s 56 of the Federal Court of Australia Act 1976 (Cth). The Court has power to order costs even though that power is not conferred expressly by the Act: see Canceri v Taylor (1994) 1 IRCR 120. The superior courts of common law have been viewed as having an inherent power to order security for costs: see JH Billington, Ltd v Billington (1907) 2 KB 106 at 109 and 111, and Lines v Tana Pty Ltd [1987] VR 641 at 642. Section 462(c)(v) assumes that such a power might be conferred on the Court. Thus, for reasons analogous to the reasons I gave in Canceri v Taylor (supra), I am of the view that the Court has power to award security in appropriate circumstances. Plainly, however, the potential operation of s 347(1) will be a relevant consideration in ordering security. That sub-section provides: "(1) A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause." A Full Court has recently determined that an application for a review is a proceeding upon which the provisions of s 347 operate: see Shackley v The Australian Croatian Club Ltd (unreported, Industrial Relations Court of Australia, Full Court, 17 December 1996). It appears to me that the appropriate approach to be adopted in this matter is to apply the general principles developed in relation to security for costs, but with the qualification that the potential operation of s 347 is also a relevant consideration. It should be mentioned that after the decision of the Judicial Registrar, Johnston was made bankrupt at his initiative. This occurred on 29 October 1996. The Official Trustee has adopted the position that these proceedings may be maintained by Johnston notwithstanding his bankruptcy and the provisions of s 60 of the Bankruptcy Act 1966. I have been handed a letter from the Insolvency and Trustee Service Australia to Mr Johnston, dated 27 November 1996, indicating that this is the view of the Official Trustee. It is a matter that is unnecessary for me to further consider, though the bankruptcy of Johnston is a relevant consideration. It appears to be common ground that in the event that Johnston is ordered to pay Milstern's costs in the review, he will be unable to do so because of his impecuniosity. There is no reason in principle why a bankrupt cannot be ordered to provide security: see Barton v Minister for Foreign Affairs (1984) 2 FCR 463. It has long been the position that the impecuniosity of a litigant is not, of itself, a reason for requiring security. See Cowell v Taylor (1886) 31 Ch D 34 at 38, Bowen LJ said: "The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty's Courts, and so an insolvent party is not excluded from the Courts, but only prevented, if he cannot find security, from dragging his opponent from one Court to another. There is also an exception introduced in order to prevent abuse, that if an insolvent sues as nominal plaintiff for the benefit of somebody else, he must give security ... Those are the common cases, I do not say that there may not be others." That general rule has endured. In Pearson v Naydler (1977) 1 WLR 899 at 902, Megarry V.C. said: "The basic rule that a natural person who sues will not be ordered to give security for costs, however poor he is, is ancient and well established .... The power to require security for costs ought not to be used so as to bar even the poorest man from the courts." However that general rule is subject to certain exceptions identified by Bowen LJ. One is in relation to appeals where the litigant has had the "benefit of a decision". An issue immediately arises as to whether an application for a review should be treated as an appeal for these purposes. An appeal from the Administrative Appeals Tribunal to the Federal Court of Australia does not found the operation of the exception: see Fletcher & Ors v Commissioner of Taxation (1992) 37 FCR 288. This was because the proceedings in that matter, though called an appeal, would have resulted in the consideration of the matter by the Court for the first time. In my opinion, the same cannot be said of an application for review. Johnston's application under s 170EA has already been considered by a Judicial Registrar. That consideration was in exercise of delegated judicial power and resulted in an order finally disposing of the application subject to any review. The reference to an "appeal" in the passage in the judgment of Bowen LJ in Cowell v Taylor (supra) was not a reference to an appeal of the type undertaken in a review. Nonetheless, the rationale for the exception would still apply, in that there had been a prior judicial determination of the application. I have been informed by Johnston that it is likely the case presented to the Judicial Registrar will be the case presented in the review, though he reserved the possibility of calling further evidence in relation to the occupational health and safety policy of Milstern, and its implementation. Johnston is now representing himself though he was earlier legally represented. I have gained the impression on a number of occasions, both as a result of things said by the legal representative formerly appearing for Johnston and by Johnston himself, that he wishes to use these proceedings to expose what he believes are deficiencies in the occupational health and safety policy of Milstern. I have made it clear to him that that matter is wholly irrelevant to these procedings, save to the extent that it may bear upon the circumstances of his termination. That Johnston may attempt to use the review for this broader and irrelevant purpose is a matter I have taken into account in deciding whether security should be ordered. A relevant consideration in determining whether security should be ordered is whether or not the appeal is likely to succeed: see Lall v 53-55 Hall Street Pty Ltd [1978] 1 NSWLR 310 and Paton v Campbell Capital Ltd (unreported, Federal Court of Australia, Burchett J, 1 July 1993). I have considered the reasons for judgment of the Judicial Registrar with care. While plainly I do not have a concluded view about whether her decision was correct or not, it appears to me strongly arguable that it was. Johnston's conduct in his dealings with Hoare appeared to go beyond the bounds of what was reasonable and appropriate. Thus, his conduct could have provided a valid reason for the termination of his employment. I accept that had it been demonstrated that Johnston had the authority to make contact with the Council, submit to a direction of it, and then give effect to it, his case would have been considerably stronger. In those circumstances, it may well have been reasonable for him to resist Hoare's attempts to enter parts of the hotel containing asbestos. His exasperation which gave rise to abusive language might, in those circumstances, have been understandable. However, the root cause of the conflict between Hoare and Johnston was Johnston's assumption of the role of contacting the Council without notice to any one in the management of Milstern and, in particular, without notice to Hoare. There is nothing in the evidence, as recounted by the Judicial Registrar, that suggests it would have been part of Johnston's duties to do what he did in contacting the Council. Indeed his conduct in raising the matter with Hoare would suggest he initially viewed it as being part of Hoare's responsibilities. I can sympathise with the view adopted by Johnston that no one was taking an interest in what he viewed, probably quite correctly, as a serious occupational health and safety issue. However the critical issue which will arise for consideration in the review is whether Johnston was entitled to both refuse Hoare entry and act in the abusive way he did. I doubt that a persuasive case can be made out that he was. If the review proceeds without Johnston being required to provide security, there is a real prospect that Milstern will again succeed in establishing that Johnston's application under s 170EA should be dismissed. That will occur in circumstances where Johnston has already presented his evidence and, by reference only to that evidence, the Judicial Registrar has dismissed his application. This is not a case where the decision of the Judicial Registrar may have been influenced by conclusions reached about conflicting evidence which might be approached differently by the Judge undertaking the review. The determination of the Judicial Registrar was by reference to the evidentiary case of Johnston at its highest. If Johnston's application again fails, as in my view it probably will, there is a real prospect that Milstern will be able to demonstrate that the review was bought vexatiously or without reasonable cause. That being so, there must be a real prospect that it will be able to obtain an order for costs against Johnston in the review, notwithstanding the provisions of s 347. In these circumstances I have concluded that it is appropriate that an order be made requiring Johnston to provide security for costs. The amount of security was not canvassed in any detail though an estimate was given that the hearing could take up to three days. For my part, I doubt the hearing would take that long. I proceed on the basis that the hearing will take a maximum of one and a half days and security in the sum of $2,000 would, in my opinion, be sufficient to cover the likely costs of Milstern for the preparation and hearing of a matter that was to last that long. I order that Johnston provide security to the Registrar of the Court in the sum of $2,000.00 within 21 days of the date of this judgment. I order that, in the event that security in this sum is not provided within that time, the proceedings be stayed. I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore. Associate: Alexandra George Dated: 27 February 1997 APPEARANCES The Applicant appeared in person Solicitor for the Respondent: Mr R. MacDonald of Vandenberg Reid Date of Hearing: 10 February 1997